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Who is familiar with the "Condotel"?

Who is familiar with the "Condotel"?
by Kaushik Sirkar, Chandler AZ REALTOR
Chandler Arizona Real Estate

When it comes to real estate investing, there are many traditional avenues. Some of these include

single family rentals
multifamily rental properties
larger apartment complexes
strip malls
flipping homes
vacation/2nd homes
REITs
individual builder stocks

Another method that I have seen recently - yet I haven't seen much discussion on AR - involves hotels. Or Condos. Or in this case, Condotels! What are these? These are individual hotel rooms within a hotel. The units are sold to individual investors/buyers. They are managed completely by the hotel for a set fee. Very hands off for the investor and a great place for vacationing....

This type of investing has become popular in areas such as Las Vegas and Miami. I was curious what kinds of experiences folks have had in this arena??

Thanks for Reading :)

Kaushik Sirkar, Chandler AZ REALTOR
http://www.homesphx.com

Posted by Kaushik Sirkar on 06/20/2007 03:44 AM

Comments (12)

condotels, hotels, condos

12 Comments on Who is familiar with the "Condotel"?

JUN

2007

We have lots of condotels in Hawaii and they tend to be choice properties right on the ocean. Lending standards are tighter and some lenders won't finance them at all. One of those lenders told me that in a down market, condotels are the first to go into foreclosure.

A group in our office is marketing one now. I do know that, per Florida law, there is little they can tell prospects about fees, income, etc without a securities license. It is somehow considered more investment than real estate.

There are a few here in Atlanta, for the most part, they are a great success. I have heard mixed thoughts on the subject, more positive than negative. Great Post.

I recently did an article about this, if you want I can give you the link. There are several here in Orlando and I have dealt with two of them on Marco Island. Chris is right they are considered an investment and we are restricted to what we can and cannot disclose.

Kaushik, how are the Condotels different from time share units? Also how do they compare in selling costs?

Chris - that is something lenders have picked up on... unfortunately when you go to qualify for a condotel purchase loan, you can't count income anyway, so there are no guarantees.

George - time shares do not require a real estate license as they are considered "Securities" so you have to have a securities license. A timeshare has you buying the right to a block of time with no real ownership in the property itself. Condotel is a "hotel room" and you own the rights to the physical volume of air much like in a condominium.

David, thank you for the explaination. That would seem like a good deal to me if you can come and go as you like with no time restrictions.

George ... in the middle of the two types of property Timeshare and Condo-Hotel is the Fractional... started in the Hamptons/Catskills summer housing market, this is a growing market that allows a pool of buyers to buy into a whole unit and have ownership rights in a Tenants in Common type situation, but the fractional ownership only affords each owner a certain pro-rated amount of time for usage.

JUN

2007

Everyone - Thanks for the insight. This is the type of discussion I was hoping to generate along with the corresponding additional information!

JUL

2007

Hi Kaushik,

I stayed in a Condo-tel in Hawaii earlier this year. I think that they are a great idea and could work in Arizona. Do you know of any here? If so, please pass along any information that you may have.

Thanks!

Kaushik

I own an ocean front condotel in South Carolina and wish I would have never bought it. I bought it for investment. I have had it a couple years. Its basically a condo inside a resort or hotel. It is very hard to get financing on these now at least in South Carolina. This was not the problem a few years ago when I bought it but now its really hard to get them financed. Now I have it for sale and many other folks do as well. The big negative that I can say about them is the onsite rental commission is outragous. I am paying out 45% of my rent to the resort. Yes I could use an off site rental company but by doing that I would loose money even with a lower split. I have already done the math on some comparable units in my tower with some outside rental companies.

DEC

2007

Does anyone have any information how to convert a hotel to a condo hotel? Thanks!

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